Gold prices saw a modest increase in Asian trading on Thursday, continuing their strong performance from 2024. A weaker U.S. dollar provided support for the yellow metal, although cautious sentiment prevailed among traders due to the U.S. Federal Reserve’s outlook on interest rates.
Spot Gold gained 0.3%, reaching $2,632.82 per ounce, while Gold Futures for February rose by 0.1%, trading at $2,644.47 per ounce by 23:06 ET (04:06 GMT).
Gold’s Strong 2024 Performance and 2025 Outlook
Gold prices surged by 27% in 2024, marking the best performance since 2010. The rally was fueled by significant rate cuts from the Federal Reserve and global geopolitical tensions.
When interest rates are low, the opportunity cost of holding gold decreases. This makes gold an attractive investment compared to assets like bonds and savings accounts that pay interest. As a result, investors often shift more capital into gold as a safe-haven asset and a hedge against global uncertainty.
Despite the strong performance last year, the Federal Reserve’s December meeting dampened some of the optimism. The central bank’s forecast of only two rate cuts in 2025 caused gold prices to fall sharply following the meeting. Since then, gold has moved more cautiously, reflecting a more conservative outlook for the year ahead.
Dollar Weakens, Remains Close to Two-Year High
The U.S. Dollar Index fell by 0.2% during Thursday’s Asian trading session but remained near its highest point in two years, which was reached last month. U.S. Dollar Index Futures also showed an upward trend.
While the dollar weakened slightly, its strength over the past year has put pressure on gold prices. A stronger dollar makes gold more expensive for international buyers, which often results in reduced demand.
Other Precious Metals See Gains
Other precious metals also saw gains on Thursday. Platinum Futures rose by 0.7%, reaching $916.65 per ounce, while Silver Futures gained 1.6%, trading at $29.715 per ounce.
Copper Prices Rise on Dollar Weakness and Chinese Data
Copper prices increased on Thursday, supported by a weaker dollar and positive data from China’s manufacturing sector. Chinese factory activity grew in December, though at a slower-than-expected pace, according to the Caixin PMI report.
The data suggests that the effect of China’s recent stimulus measures is starting to fade. Market participants are now awaiting further clarity on China’s economic plans for 2025, where the government is expected to adopt a looser monetary policy.
Benchmark Copper Futures on the London Metal Exchange rose 0.9%, trading at $8,863.50 per ton. Meanwhile, February Copper Futures gained 0.7%, reaching $4.0492 per pound.
